Morgan Stanley maintains its "overweight" rating on CHINA RES BEER (00291) with a target price lowered to HK$30.

Morgan Stanley issued a research report, lowering the target price of CHINA RES BEER (00291) by 11.8% from HK$34 to HK$30, mainly due to the reduction in profit forecasts for 2024-2026, maintaining a "hold" rating. Morgan Stanley's latest forecast predicts a 1% decrease in sales for CHINA RES BEER in 2024, and a 1% increase in 2025, with a 5% decrease in recurring profits in 2024 and an 8% increase in 2025. Morgan Stanley stated that the reduction in CHINA RES BEER's reported and recurring net profit forecasts for 2024-2026 by 6-9% is mainly due to: 1) cutting total sales forecasts by 1-3%, mainly due to decreases in beer and liquor sales forecasts; 2) lowering gross margin forecasts by 0.5-0.8 percentage points, mainly due to growth in the mid-to-high-end business and the reduction of benefits from lower raw material costs; 3) other income is expected to decrease in 2024 as government subsidies decrease.